Enchancing defence capabilities

By N.S. Kohli

The latest CAG report, tabled in Parliament on 14 March has rapped the UPA government for buying the 37-year-old amphibious transport warship 'USS Trenton'. The CAG report holds that since the ship has already outlived a major part of its service life, which is envisaged to be 40-years, the decision for its acquisition 'does not appear to be prudent'. The 16,900-tonne ship was commissioned in June 2007, making it the second largest warship in India's naval fleet after the 28,000-tonne aircraft carrier 'INS Viraat'. However, the navy pooh-poohs such talks, and commented that "Accountants can pick holes in virtually everything."

The transport warship renamed 'INS Jalashwa' has been brandished as a visible symbol of the rapidly-expanding strategic embrace of the navy across the Indian Ocean. It gives India immense strategic sea-lift capabilities since it can transport 1,000 soldiers or material over long distances. The navy has a strategic role to play across the Strait of Hormuz to the Malacca Straits. The former is the world's most important maritime choke point so also the latter. Through the Strait of Hormuz in 2006, 16.5 to 17 million barrels of oil per day from Saudi Arabia, Iran and the United Arab Emirates passed through it, destined for Japan, the United States of America, western Europe, India and others. This constitutes two-fifths of all sea-borne trade in oil, and three-fourths of Japanese oil imports.

India has big stakes in peace and security in the Indian Ocean region. Over 70 per cent of its oil requirements are currently being imported. The oil supplies arrive by sea; therefore, secure sea lanes are crucial. Most of the crude imported from the Gulf comes to India's western coast in the Gulf of Kutch, with 15 to 20 very large crude carriers moving between the Persian Gulf and the Gulf of Kutch at any given time. Two-thirds of India's oil and gas production come from off-shore fields, the most important of which are in the Arabian Sea. India is exploring oil and gas off Chennai, in the Andaman and Nicobar Islands and in the Godavari and Cauvery basins. The security of these assets and of off-shore rigs is most important. Almost 95 per cent of India's trade is sea-borne. India has 7,516 kilometres of coastline and an exclusive economic zone of two million square kilometres, which requires protection.

Given India's stakes, its navy has pursued an active policy of showing the flag in the region and engaging in confidence building so that its intentions are rightly understood. With the US navy, a major player in the Indian Ocean, the Indian navy has been carrying out the Malabar exercises since 1992, with participation of nuclear-powered submarines, aircraft carriers, long-range patrol aircraft, cruisers and destroyers. Procedures for inter-operability have been worked out between the two. As part of the naval-cooperation between the two countries for Operation "Enduring Freedom", at US request, India escorted high value US shipping through the Malacca Straits for a few months. Exercises have also been conducted with France, the United Kingdom, Australia, and South Africa and lately with Russia. The tsunami of 2004 demonstrated that only two navies, that of the US and India, had the capability to provide disaster relief by sea over long distances at very short notice.

India has, since 1995, been conducting the biennial get together involving the south Asian and south-east Asian navies. In 2006, nine regional navies participated. The navy holds regular exercises in the Indian Ocean region with south-east Asian navies, apart from making annual friendly visits to important ports in the region. The navy provides training in its establishments to trainees from Indian Ocean region countries. Along with the coast guard, the Indian navy conducts surveillance in the Palk Strait, the Gulf of Mannar and around its own island territories to curb the activities of the Liberation Tigers of Tamil Eelam terrorists, gun-running, poaching and influx of refugees.

International terrorism, proliferation threats (especially from non-state actors associated with terrorism), piracy, trafficking of arms, drugs and human beings are challenges facing the international community in their sea-borne dimension. Provisions of the United Nations Convention on the Laws of the Sea (UNCLOS), 111, that deal with freedom of high seas and right of innocent passage in territorial waters constrain the freedom of action of countries in dealing with these threats. Therefore, ad hoc initiatives have been taken to deal with threats of suicide attacks on ships, WMD material proliferation, and misuse of containers and so on. These initiatives, such as the container security initiative and the proliferation security initiative, have dispensed with the need to build a large international consensus beforehand. While India has joined the CSI so as not to disrupt its own commercial traffic to US ports, it has not joined the PSI because of legal issues.

India's naval policy has to be handled in a region that is extremely diverse in its complexion politically, economically and culturally, with pronounced sub-regional personalities rather than any overarching regional identity. At the sub-regional level, several local conflicts exist. No multilateral security organization encompassing the Indian Ocean region has emerged, a vacuum filled by the presence of Western powers. Their presence is for some a source of conflict and for others a source of security. International terrorism and religious extremism have emerged as dangerous problems. The Gulf region is exceptionally rich in hydrocarbon resources, which includes the protection of sea-lanes through which the oil and gas are transported, is a primary concern. Two critical choke points on the western and eastern edges of the Indian Ocean region respectively have a major geostrategic importance in this context and that of trade flows in general. The shift in global economic growth to parts of the region gives to the rest of the world increased stakes in peace and stability in this area.

India's central location in the Indian Ocean region, its dependence on the Indian Ocean sea-lanes for its trade and energy flows, its island territories, its long coastline and its EEZ give it a critical role to play in joint efforts to manage issues of freedom of navigation, peaceful uses of the sea left unsettled by UNCLOS 111. India has been trying to involve littoral states, including South Africa, Australia, Japan and South Korea to expand cooperation in protecting the sea routes for uninterrupted trade and maritime security of the region. China has been sceptical about such naval cooperation, and considers it as ganging up against Beijing. INAV

Implications of price rise

By Narendra Sharma

Introducing Budget 2008-09 in Parliament, Finance Minister P. Chidambaram quoted Prime Minister Manmohan Singh to say that no government in our country can be oblivious to the objective of ensuring price stability without hurting the growth process.

The observation of the Finance Minister is unexceptionable, but from the working people’s point of view, it falls far short of requirements. For one thing, the FM, while taking credit for keeping inflation under control, had to take cognisance of the fact that prices of essential commodities like foodgrains are already high enough for the working poor.

Secondly, both the Prime Minister and the Finance Minister avoided mentioning the need to ensure growth with jobs. Central trade unions have been protesting against jobless growth. They even met the Prime Minister to urge him that growth with jobs must be ensured. With the UPA Government’s economic reform policies leading to job loss both in the public and the private sectors, their favoured objective remains GDP growth at all costs. Therefore, jobless growth has been the rule. However, there has been some employment growth in the informal/unorganised sector, where wages are low, insecurity is the norm and labour laws are the first victim.

The policy-makers are oblivious of the fact that rising joblessness coupled with unimaginable disparities are inevitably accompanied by the growth of high-voltage Naxalism, criminalities, rape, looting, kidnaps, suicides, etc. compelling rulers to expand the law and order mechanism.

Another observation of the Finance Minister should add to the worry of the working people as it points to the likely policy faultlines ahead. Mr. Chidambaram said, "Since downside risks have increased worldwide, we must be vigilant and prepared to make swift adjustments in our policies to achieve the goal of growth with price stability." Obviously, he was referring to the growing uncertainties in the world market owing to the escalating crisis in the US economy. This means that the working people will have to be doubly vigilant so that the "downside risks" are not resolved by Indian policy-makers at the cost of workers alone while making "swift adjustment in our policies" to serve the corporates.

What is the place given to improving the working and living conditions of India’s 400-million workforce? It is said that the FM has not gone by the policy reform options advice contained in the Economic Survey, such as allowing regulated private entry into coalmines, auctioning all loss-making PSUs, allowing negative bidding in the form of debt write-off. It has also suggested, among others, amending the Factories Act to increase the work week to 60 hours from 48 and daily limit to 12 hours to meet the seasonal demand through overtime, etc.

As for the Central Government employees, the Finance Minister expressed the confidence that the Sixth Pay Commission "will meet the legitimate expectations of Government employees." No allocation has been provided in the Budget for this exigency, the extent of which will broadly be known when the Commission submits its report by March 31, 2008 – during the Budget Session itself. Both the Central Government and the employees will be eagerly waiting for the Commission’s report. It is recalled that the Joint Action Council of the Central employees had to give call for a nationwide protest strike before the UPA Government agreed to appoint the Pay Commission in 2006; they were not satisfied only with the merger of DA with basic pay.

The Finance Minister has taken note of the demand for unorganised sector workers’ social security and referred to the Bill before Parliament. Otherwise, he said social security for the unorganised sector will be given "in phases". In this context, he said, the Aam Aadmi Bima Yojna was being initiated under which the LIC is to cover one crore landless by September 30, 2008 for which Rs 1,500 crore was being set apart. Besides, another Rs 1, 000 crore was allocated for covering another one crore landless families. He also referred to the Rashtriya Swasthya Bima Yojna, which is to be implemented by April 1, 2008 and the Indira Gandhi National Old Age Pension Scheme which has been enlarged with effect from September 19, 2007 to include all people over 65 years under BPL, and was expanded from 87 lakh to 157 lakh beneficiaries. For this, an amount of Rs 3443 crore has been allocated.

In recent months, anganwadi workers have held regional and national conferences and raised demands for higher wages and regular government employment. The Budget has provided some relief for the benefit of 18 lakh anganwadi workers and helpers. The wages of anganwadi workers have been raised from Rs 1,000 per month to Rs 1,500 and those of helpers from Rs 500 to Rs 750. In view of the rise in prices since the anganwadi system was instituted, this wage hike is too little and too late.

This is one programme to improve the content of which the UPA constituents and the Left parties had done their best during the law-making period. And, again, this is one Indian programme launched to reduce rural impoverishment, which is under study at the United Nations level also. The Government, however, has still to evolve a more reliable method to monitor it so that NREGA reaches the target groups and wastage of money is avoided.

Noting that there has been an unmistakable boom in investments since 2005-06, Mr. Chidambaram favoured enhancement of investment. The saving rate and investment rate increased from 29.8 per cent and 28.2 per cent respectively in 2003-04 to 35.6 per cent and 36.3 per cent. Happy at the 50 per cent rise in direct foreign investment to US dollar 18 billion in April-December 2007-08, the FM declared, "Our policy is to encourage all sources of investment, domestic and foreign, private and public." Moreover, he said, it is the policy of the Government to list more and more CPSEs "in order to unlock their true value and improve corporate governance."

It should, therefore, not be surprising that corporate profits and productivity have been growing in this period. But the Government showed little concern over the decline in the share of wages in corporate finances.

The "debt waiver" scheme for small and marginal farmers and "debt relief" scheme for other farmers is certainly an appreciable policy step even though it has been taken late. The FM said that implementation of the scheme would be completed by June 30, 2008. Also, that "upon being granted debt waiver or signing an agreement for relief under OTS (One-Time Settlement), the former would be entitled to fresh agricultural loan from banks in accordance with normal rules. The organised working class has welcomed this although it remains a matter of closer expert study as to what more needs to be done to enliven our agriculture. (IPA Service)

Synergise NKC and HRD Ministry

By Umashankar Joshi

Had it not been only 16 months to the next general election, the pressure on Human Resource Development (HRD) Minister Arjun Singh to "deregulate education" and free it from overdone government control would have mounted and mounted. For the past three years, rejecting and ignoring the signals from the Prime Minister's Office (PMO), Arjun Singh has kept his stranglehold on education intact, occasionally using the Left and the radical lobby in the Congress to protect his turf.

The HRD minister's biggest battle, in a sense, has been with the National Knowldge Commission (NKC), an advisory panel under technocrat Sam Pitroda, set up by and meant to report back to the Prime Minister. This past week, the NKC submitted its second report to Manmohan Singh. Over two reports, the Commission has called for greater autonomy and transparency in the education sector, more of a role for private players. In 2007, it had recommended the setting up of an Independent Regulatory Authority for Higher Education (IRAHE).

In short, all this is designed to drive the babus of Shastri Bhawan out of business.

As such, with only a month to go for the final (full-fledged) budget of the UPA government-with increased public allocations for education going into the same inefficient, HRD Ministry-run delivery system-the issue of education reforms has reared its head again. An official in the PMO once called the lack of progress on liberating higher education part of Manmohan Singh's "unfinished agenda". In the coming weeks, the war between the HRD Ministry and the PMO can be expected to intensify.

In the NKC report is any indication, the HRD Ministry bastion is likely to come under assault one final time. India's emergent human resource gap, economists have suggested, needs to be filled urgently and private sector participation is inevitable.

Indeed, the virtual state monopoly hasn't quite helped higher education. As sector specialists point out, India's gross enrolment ratio in higher education is "never more than 11 per cent, compared to the world average of 23.2 per cent". Consider other societies: "The gross enrolment ratio is 36.5 per cent for countries in transition, 54.6 per cent for developed countries and 22 per cent for Asian countries." India is clearly the sick man of higher education.

The enrolment figures are stark and revealing. Higher education is the last survivor of the shortage economy, where everything was rationed and even per capita telephone availability was abysmally low. NKC chief Pitroda has a simple prescription for the crisis-if the government can't do it alone, with its limited financial resources, with its limited financial resources, let it create opportunities for increased private participation.

Yet, Arjun Singh is unmoved. He has used ideological shibboleths to protect his empire, at one point reportedly telling the PMO that "education cannot be left to market forces".

In the end an obstreperous minister can delay but no reverse the trend of history. As Pitroda told The Sunday Pioneer, "It is time we began to look towards the future of Indian education-in terms of equity, excellence and expansion. We must keep pace with radical changes taking place globally."

Rolling back the government bureaucracy is a key element of the paradigm the NKC is suggesting. "We have made deregulating education a very important point in our recommendations," Pitroda said.

A new approach is also necessary to bridge the gap between the rich and the poor, between urban and rural areas, in terms of access to higher education. The NKC's second report has said that the current 350 universities and 18,000 colleges are grossly inadequate for a population of 550 million young people.

The Commission has set India an eventual, long-term goal of 1,500 universities to meet the challenge of training and preparing the country's teeming human capital for the 21st century. "And this is where we require increased private participation," an NKC member said.

The issue of a regulatory authority had been raised in the NKC's first report in 2007. This was seen as necessary to distance universities from political influence. The Pitroda-led panel had also asked for the University Grants Commission (UGC) and the All India Council for Technical Education (AICTE) to be revamped, arguing that they needed to adapt to new times, new demands.

Beginning with S. Nurul Hassan in the 1970s, successive Congress education ministers have used higher education oversight bodies to patronise party favourites and fellow travellers. Arjun Singh is part of this tradition. As such, he has not been happy with the NKCs remarks.

Over the past two years, the NKC's recommendations have not influenced Union HRD Ministry policy-makers. Even so, as Pitroda revealed, the NKC dialogue with 18 state governments has proved very encouraging. "Most of the states have shown readiness to accept our prescription for improvement in education," he said.

For instance, the Commission's recommendation that the English language be taught from class I has been widely welcomed in the states.

The NKC's second report deals with 20 subjects and makes 160 recommendations. Members of the Commission are under no illusion that, within the Central government, there is still a big question mark over receptivity to the reports. What has riled Arjun Singh the most is the suggestion that the UGC and the AICTE be restructured. The NKC has argued that these bodies worked better in a regulatory regime that focused on "punitive actions rather than on nurturing institutions".

As members of the NKC see it, the issue is simple enough: "They have experimented with this mechanism for years now, and we feel they could no deliver. So we must either reform or allow the status quo to go on." The point is, Arjun Singh aside, the Left too is hostile to Pitroda's ideas. With the Manmohan Singh government close to its pre-election lame-duck phase, can the NKC's hope be actualised?

Pitroda shrugged his shoulders, emphasised the NKC's advisory nature and only said, "If nothing else, we have at least kicked off a debate in the country." For the moment, Arjun Singh is not keen on a debate, only on filibustering. INAV